ORDER
P.G. Chacko, Member (J)
1. As the case involves a short issue and threadbare arguments were made thereon from both sides, we have taken the view that the appeal itself can be finally disposed of and, accordingly, after dispensing with predeposit, we have taken up the appeal for disposal.
2. In adjudication of four show-cause notice (SCNs) covering the total period June’93 to August’94, the original authority had confirmed a total demand of duty of Rs. 9,69,638/- against the appellants. The appeal filed by the party against the Order-in-Original was dismissed by the first appellate authority. But the further appeal preferred to this Tribunal partly succeeded. The Tribunal set aside the demand of duty for a part of the period of dispute and directed the original authority for re-quantification of the duly to be recovered from the assessee. This decision was not acceptable to the department. The civil appeals filed by them were allowed by the Supreme Court as per judgment dated 5.1.2005, whereby the original authority’s order was restored. Pursuant to the apex court’s judgment, the party paid the entire amount of duty in six instalments as shown below:
TABLE
Subsequently, the department advised the appellants to pay interest on duty from 26.8.95 i.e. the date immediately succeeding the period of 3 months from the date on which the Finance Bill, 1995 received the President’s assent. The party submitted a representation to the Commissioner of Central Excise against such demand of interest. They were of the view that interest was payable only from 5.1.2005, the date on which the Hon’ble Supreme Court allowed the civil appeals. Learned Commissioner rejected this contention and in a letter dated 26.5.2006, demanded interest amounting to Rs. 15,25,477/- from 26.8.95 under Section 11AA of the Central Excise. The present appeal is directed against this demand of interest.
3. Learned Counsel for the appellants pointed out that, as Section 11AA of the Central Excise Act was not there in the statute book during the period of demand of duty, any interest on duty was not leviable under that provision. In this connection, reliance was placed on Komal Straw Board & Mill Board Industries v. CCE Ludhiana , wherein a demand of interest was set aside by the Tribunal after noting that Section 11AA had come into effect only from 26.5.95, i.e., after the period of dispute (16.3.95 to 31.3.95). Counsel also argued that, if at all Section 11AA was applicable, interest on duty was leviable only from the date on which the dispute was finally settled in the Supreme Court. In this connection, he relied on the Tribunal’s decision in Mukand Ltd. v. CCE Mumbai , wherein it was held that liability to pay interest did not commence until the dispute was finally settled by the Commissioner (Appeals), Appellate Tribunal or the Court, as the case may be.
4. On the other hand, learned SDR pointed out that, in the case of Komal straw Board & Mill Board Industries (supra), the Tribunal had overlooked the proviso to Sub-section (1) of Section 11AA. She submitted that, in terms of the said proviso, interest was leviable on an amount of duty determined under Sub-section (2) of Section 11A even before the date on which Section 11AA came into force. In this connection, reliance was placed on the Tribunal’s decision in Prabhat Zarda Factory Ltd. v. Commissioner . The civil appeal filed by the party against the said decision of Supreme Court vide 2004(166) ELT A150 (SC). Ld. SDR, further, submitted that the issue in the instant case was already covered by the Tribunal’s decision in Fine Automotive & Indus. Radiators P. Ltd. v. CCE Chennai .
5. We have considered the submissions. Section 11AA reads as under:
“Section 11AA : Interest on delayed payment of duty. – Subject to the provisions contained in Section 11AB; where a person chargeable with duty determined under Sub-section (2) of Section 11A, fails to pay such duty within three months from the date of such determination, he shall pay, in addition to the duty, interest at such rate not below ten per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Board, on such duty from the date immediately after the expiry of the said period of three months till the date of payment of such duty:
Provided that where a person chargeable with duty determined under Sub-section (2) of Section 11A before the date on which the Finance Bill, 1995 receives the assent of the President, fails to pay such duty within three months from such date, then, such person shall be liable to pay interest under this section from the date immediately after three months from such date, till the date of payment of such duty.
Explanation 1 – Where the duty determined to be payable is reduced by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, the Court, the date of such determination shall be the date on which an amount of duty is first determined to be payable.
Explanation 2. – Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, the Court, the date of such determination shall be,
(a) for the amount of duty first determined to be payable, the date on which the duty is so determined;
(b) for the amount of increased duty, the date of order which the increased amount of duty is first determined to be payable;
(c) for the amount of further increase of duty, the date on which the duty is so further increased.
In the present case, the duty was determined under Sub-section (2) of Section 11A on 19.12.94 (the date on which the original authority confirmed demand of duty in adjudication of the SCNS). The determination by the original authority was affirmed by the first appellate authority, which neither increased nor reduced the quantum of duty. The order passed by this Tribunal setting aside the appellate Commissioner’s order was set aside by the Supreme Court in the civil appeals filed by the department. The apex court upheld the original determination of duty done by the original authority under Sub-section (2) of Section 11A. The duty so determined was subsequently paid by the party in six instalments, the last of these being on 8.8.2005. Thus the duty determined by the original authority under Sub-section (2) of Section 11A was paid beyond the period of 3 months from the date (26.5.1995) on which the Finance Bill, 1995 received the President’s assent. In terms of the proviso to Section 11A(1), the assessee should have paid the duty amount within the said period of 3 months, in which event there would have been no liability to pay interest. On account of their default, the appellants became liable to pay interest on the duty amount from 26.8.95 to date of payment in terms of the said proviso. The view taken by the Commissioner in the impugned letter is perfectly in accordance with the legal provisions. As rightly pointed out by learned SDR, the facts of this case are similar to those of Fine Automotive & Inds. Radiators (supra), wherein the assessee was held liable to pay interest on duty for the period from 26.8.95 to the date of payment of duty.
6. Learned Counsel relied on Sub-section (2) of Section 11AA for contending that the provisions of Sub-section (1) were not applicable to his case. Sub-section (2) referred to by counsel reads thus:
(2) The provisions of Sub-section (1) shall not apply to cases where the duty becomes payable on and after the date on which the Finance Bill, 2001 receives the assent of the President.
We have already held that the duty became payable, in the instant case, on the date on which it was determined by the original authority. The above provision is applicable only where the duty became payable on or after the date on which the Finance Bill, 2001 received the President’s assent. It would follow that Sub-section (1) of Section 11AA is the provision of law applicable to the facts of the instant case. Learned Counsel’s argument that Section 11AA was not invocable for levying interest on duty demanded for any period prior to the date of enactment of this provision of law is negatived by the proviso to Sub-section (1) of Section 11AA. The Tribunal’s decision in Prabhat Zarda Factory case, affirmed by the Supreme Court, is also against the above argument. In the case of Mukand Ltd. (supra) cited by learned Counsel, there was no determination of duty under Section 11A(2), unlike in the present case. As rightly pointed out by learned SDR, the Tribunal, in the case of Komal Straw Board & Mill Board Industries (supra), apparently did not take into account the proviso to Section 11AA(1) while holding that no interest on duty was leviable for any period prior to 26.5.95. Neither of the cases cited by learned Counsel is of any aid to the appellants’ claim.
7. In the result, the appeal is dismissed.
(operative part of the order was pronounced in open court on 14.9.06)